Citigroup has agreed to pay $158 million in order to resolve an investigation into its mortgage practices.
After admitting it had defrauded a federal insurance program—one designed to encourage home ownership—out of hundreds of millions of dollars, Citigroup acknowledged and accepted its failure to comply with the terms of the program. Also, it admitted to filing false statements certifying that loans qualified for the program.
Citigroup’s CitiMortgage division failed to report a single deficient loan it originated to the Department of Housing and Urban Development for a total of five years. Since 2004, 30% of Citigroup loans have defaulted.
Citigroup’s quality-control unit, which was charged with reviewing loans for eligibility, claimed they were bullied by the business side to report fewer problems. The director of the quality unit described the business unit’s conduct as “nothing short of abuse and bordering on fraudulent actions”, according to the complaint.
Read more about Citigroup’s misconduct, and how they have cost the U.S. millions of dollars in insurance claims.
The settlement is the latest infraction by Citigroup, which was also party to a $25 billion settlement that was reached last week over robosigning practices.
In addition, Citigroup is one of many banks involved in the current Libor probe.